Economy Adds 255K Jobs In July, Unemployment Rate Steady at 4.9%

The economy really is picking up steam and today's jobs report points to even greater strength from the consumer. Nonfarm payrolls surged a much stronger-than-expected 255,000 in July. The strength is underscored by a 5,000 upward revision to June which is now at 292,0000 and also to May, now at 241,000 for a 13,000 gain. These three months are all very strong results.

Confirmation of strength is a rise in participation, 1 tenth higher at 62.8 percent, which pulls up on the unemployment rate that however held at a low 4.9 percent. Wages further confirm the strength, with average hourly earnings up a sizable 0.3 percent and the year-on-year rate up 2 tenths to 2.6 percent.

And there's more strength to come looking at the industry breakdown where the most sensitive category shows solid gains as professional & business services rose 70,000 following May's sizable 53,000 increase. Within this, temporary help services, which businesses typically turn to before making permanent hires, rose 17,000 vs May's 22,000 jump. Construction was also strong in the month, up 14,000, as was retail up 15,000 and financial activities up 18,000. Government supported the strength, at a gain of 38,000.

Slack is diminishing in the labor market and the pop higher in earnings could be a sign of things to come. The hawks will come out of hiding following this report which definitely brings alive expectations for a rate hike at the September FOMC.

Recent History Of This Indicator:
Nonfarm payrolls got back on track in June, surging 287,000 to eclipse May's 38,000 slump in a gain driven by temporary workers which points to permanent hiring ahead. Forecasters see growth in nonfarm payrolls easing back in July, to a consensus 185,000 in a result that would still be consistent with solid growth in the labor market. In other signs of strength, the unemployment rate is expected to dip 1 tenth to 4.8 percent with average hourly earnings picking up to 0.3 percent following June's very soft 0.1 percent gain.